When regulatory exams are looming on your horizon, you might want to put off the implementation of a new solution for your risk, compliance, and vendor management programs. After all, rolling out a new solution takes time, and your focus is your next exam, right?
That’s not necessarily the case. Here are 6 reasons to implement risk, compliance, and vendor management solutions before your next exam:
- Shorter, less burdensome exams. Nearly 40 percent of bankers reported that their exams were shorter when examiners reviewed their risk management system, according to one industry survey.
Over 50 percent said it reduced the scope of examiners’ review.
Implementing risk management solutions before an exam gives examiners confidence in the thoroughness of your work. They’ll spend less time looking for deficiencies, because they’ll have the confidence that you’ll have already identified and corrected them.
Implementing risk management solutions before an exam gives examiners confidence in the thoroughness of your work. They’ll spend less time looking for deficiencies, because they’ll have the confidence that you’ll have already identified and corrected them.
- Better predict where examiners will be looking. Examiners invest their time and resources on identifying and examining areas of increased risk. Do you think you know where the greatest risk is? Or do you have updated risk assessments that let you know exactly where and how much risk you have?
Examiners will be looking to answer that question and use it as a guidepost for their exams. When you know where the risk is, you know where examiners will be looking (and you’ll have a stronger, more risk-resilient institution).
When examiners ask for pre-exam documentation, financial institutions with proactive risk, compliance, and vendor management programs encounter few surprises. That’s because:
• They know you have identified where risk is greatest, and you expect examiners to address these areas.
• You have already dedicated extra resources to high-risk areas.
• They can see how you have considered compliance risk (the risk that an institution or its third-party vendors will fail to follow laws, regulations or internal policies) when measuring the risk of an activity.
• You have assessed activities with increased compliance risk have sufficient resources and controls.
You have already dedicated extra resources to high-risk areas.
They can see how you have considered compliance risk (the risk that an institution or its third-party vendors will fail to follow laws, regulations or internal policies) when measuring the risk of an activity.
You have assessed activities with increased compliance risk have sufficient resources and controls.
- Show your examiners you’re being proactive. Examiners are taking a closer look at risk management. Safety and soundness, operations, and strategic planning all tie back to this important topic. Regulators want to see financial institutions “guarding against complacency” and “vigilant when considering growth and new profit opportunities.” Examiners consider the effectiveness of a financial institution’s risk management systems and processes when assessing compliance.
Implementing risk, compliance and vendor management solutions that give you better insights into these risks shows examiners you recognize the increasing importance of risk management and are taking action to make yours more effective and transparent.
Not only does an effective risk management solution help a financial institution prepare for an exam by identifying and controlling risk, in many cases the examiners will consider a financial institution’s risk management approach when conducting the exam and assessing compliance and third-party vendor management.
Related: It's Not Too Late: 2022 Can Be the Year You Automate GRC!
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Better protect your financial institution and its customers. Maybe you’ve never had a significant exam finding so you’re not worried about examiners. Is that the only reason you invest in risk, compliance, and vendor management? Of course not. You want to make sure that systems are up and running, consumer compliance laws are followed, and risks are managed so that you continue to serve the customers who rely on you.
Good solutions will help your financial institution identify and correct problems quickly so that small problems don’t become big problems that can hurt you or consumers. If you’re waiting until you know you have a problem to adopt risk, compliance, and vendor management solutions, it may be too late.
- A new solution doesn’t mean you have to reinvent your risk, compliance, or risk management system. Even if your financial institution has a strong risk, compliance, or vendor management program in place, you may still be bogged down by manual processes like emails and spreadsheets. A risk, compliance or vendor management solution can work with your existing policies, procedures, risk assessments and other aspects of your program for a smoother, easier implementation.
- Are you really going to have more time later? Let’s get real here. You may be waiting for the perfect time to implement new, more efficient compliance, vendor, and risk management solutions. If you’re waiting for a lull in your schedule or a blissfully quiet period, I’ve got some bad news: It’s not coming. Be proactive!
Related: Want to Up Your Compliance Game? Here Are 5 Things You Should Stop Doing Right Now & 5 Things You Should Do Instead
Yes, exam prep can be a heavy lift, especially if you’re still relying on manual processes. But will you really have more time after the exam? There’s always a risk assessment to update, a new regulation to implement, or a vendor that requires due diligence. Plus, there are always findings to track and remediate.
The perfect time is now. When you automate risk, compliance, and vendor management, you’ll not only enjoy the benefits of a smoother process for your next exam. You’ll lay the groundwork to make all your future exams easier—and gain efficiencies that will free you up to focus on your next initiative for safety, soundness, and success at your financial institution.
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